10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED AUGUST 31, 2014

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 0-8765

BIOMERICA, INC.

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(Exact name of registrant as specified in its charter)

          Delaware                                                         95-2645573

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(State or other jurisdiction of                                          (I.R.S. Employer

incorporation or organization)                                            Identification No.)

17571 Von Karman Avenue, Irvine, CA                                  92614

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(Address of principal executive offices)                         (Zip Code)

Registrant's telephone number including area code:  (949) 645-2111

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(Former name, former address and former fiscal year, if changed since last report.)

  (TITLE OF EACH CLASS)                         (NAME OF EACH EXCHANGE ON WHICH REGISTERED)

  ---------------------                   -------------------------------------------

  Common, par value $.08                                  OTC-BULLETIN BOARD

Securities registered pursuant to Section 12(g) of the Act:

(TITLE OF EACH CLASS)

COMMON STOCK, PAR VALUE $0.08

Indicate by check whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

         Yes [X] No [_]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Date File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (paragraph 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

         Yes [X] No [_]

Indicate by check mark whether the registrant is a large accelerated, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of "large accelerated filer", "accelerated filer", and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer [_]	Accelerated Filer         [_]
Non-Accelerated Filer   [_]	Smaller Reporting Company [X]

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act).           Yes [_] No [X]

Indicate the number of shares outstanding of each of the registrant's common stock, as of the latest practicable date: 7,551,964 shares of common stock, par value $0.08, as of October 15, 2014.

	BIOMERICA, INC.
	INDEX
PART I	Financial Information
Item 1.	Financial Statements:
	Condensed Consolidated Statements of Operations and Comprehensive Loss (unaudited) – Three Months Ended August 31, 2014 and 2013	1
	Condensed Consolidated Balance Sheets (unaudited) August 31, 2014 and (audited) May 31, 2013	2
	Condensed Consolidated Statements of Cash Flows (unaudited) - Three Months Ended August 31, 2014 and 2013	3
	Notes to Condensed Consolidated Financial Statements (unaudited)	4-8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operation	9-10
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	10
Item 4.	Controls and Procedures	10
PART II	Other Information
Item 1.	Legal Proceedings	11
Item 1A.	Risk Factors	11
Item 2.	Unregistered Sales of Equity Securities & Use of Proceeds	11
Item 3.	Defaults upon Senior Securities	11
Item 4.	Mine Safety Disclosures	11
Item 5.	Other Information	11
Item 6.	Exhibits	11
	Signatures	12

PART I - FINANCIAL INFORMATION

SUMMARIZED FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

BIOMERICA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE LOSS(UNAUDITED)

	Three Months Ended August 31,
	2014		2013
Net sales	$	1,034,450	$	1,013,739
Cost of sales		(724,539)		(753,448)
Gross profit		309,911		260,291
Operating Expenses:
Selling, general and administrative		338,316		342,802
Research and development		195,706		91,257
Total operating expenses		534,022		434,059
Loss from operations		(224,111)		(173,768)
Other Income (Expense):
Dividend and interest income		4,861		6,054
Interest expense		(18)		-
Total other income		4,843		6,054
Loss before income tax		(219,268)		(167,714)
Provision for income taxes		-		-
Net loss	$	(219,268)	$	(167,714)
Basic net loss per common share	$	(0.03)	$	(0.02)
Diluted net loss per common share	$	(0.03)	$	(0.02)
Weighted average number of common and
Common Equivalent Shares:
Basic		7,547,839		7,280,866
Diluted		7,547,839		7,280,866
Net loss	$	(219,268)	$	(167,714)
Other comprehensive loss, net of tax:
Foreign currency translation		(934)		(91)
Comprehensive loss	$	(220,202)	$	(167,805)

The accompanying notes are an integral part of these statements.

1

 BIOMERICA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	August 31, 2014 (unaudited)		May 31, 2014 (audited)
Assets
Current Assets:
Cash and cash equivalents	$	1,646,978	$	1,509,125
Accounts receivable, less allowance for doubtful accounts of $14,459 and $30,000 as of August 31, 2014 and May 31, 2014, respectively		788,199		1,447,705
Inventories, net		1,880,193		1,765,772
Prepaid expenses and other		135,196		103,572
Deferred tax assets, current portion		87,000		87,000
Total current assets		4,537,566		4,913,174
Property and Equipment, net of accumulated depreciation & amortization		571,538		614,337
Deferred Tax Assets, net of current portion		359,000		359,000
Investments		165,324		165,324
Intangible Assets, net		370,253		382,181
Other Assets		43,498		36,297
Total Assets	$	6,047,179	$	6,470,313
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable and accrued expenses	$	230,444	$	441,681
Accrued compensation		118,281		114,163
Total Current Liabilities		348,725		555,844
Commitments and Contingencies (Note 6)
Shareholders' Equity:
Preferred stock, no par value authorized 5,000,000 shares, none issued and none outstanding at August 31, 2014 and May 31, 2014		-		-
Common stock, $0.08 par value authorized 25,000,000 shares, issued and outstanding 7,551,964 and 7,543,714 at August 31 and May 31, 2014, respectively		604,156		603,496
Additional paid-in-capital		18,312,681		18,309,154
Accumulated other comprehensive loss		(11,083)		(10,149)
Accumulated deficit		(13,207,300)		(12,988,032)
Total Shareholders' Equity		5,698,454		5,914,469
Total Liabilities and Shareholders' Equity	$	6,047,179	$	6,470,313
The accompanying notes are an integral part of these statements.

  2

BIOMERICA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Three Months Ended August 31,
	2014		2013
Cash flows from operating activities:
Net loss	$	(219,268)	$	(167,714)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		63,420		50,235
Change in provision for losses on accounts receivable		(15,541)		4,675
Inventory reserve		20,782		(6,713)
Gain on disposal of equipment		(665)		-
Stock option expense		1,013		881
Decrease in deferred rent liability		(3,691)		(1,656)
Changes in assets and liabilities:
Accounts receivable		675,047		(36,264)
Inventories		(135,203)		(213,509)
Prepaid expenses and other assets		(38,825)		15,527
Accounts payable and other accrued expenses		(207,546)		(25,609)
Accrued compensation		4,118		3,876
Net cash provided by (used in) operating activities		143,641		(376,271)
Cash flows from investing activities:
Purchases of property and equipment		(3,675)		(8,731)
Proceeds from sale of equipment		1,900		-
Net cash used in investing activities		(1,775)		(8,731)
Cash flows from financing activities:
Exercise of stock options		3,173		760
Increase in intangibles		(6,252)		-
Net cash (used in) provided by financing activities		(3,079)		760
Effect of exchange rate changes in cash		(934)		(91)
Net increase (decrease) in cash and cash equivalents		137,853		(384,333)
Cash and cash equivalents at beginning of period		1,509,125		2,469,796
Cash and cash equivalents at end of period	$	1,646,978	$	2,085,463
Supplemental Disclosure of Cash-Flow Information:
Cash paid during the period for: Interest	$	18	$	-

The accompanying notes are an integral part of these statements.

3

BIOMERICA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 1: Basis of Presentation

The information set forth in these condensed consolidated statements is unaudited and reflects all adjustments which, in the opinion of management, are necessary to present a fair statement of the consolidated results of operations of Biomerica, Inc. and Subsidiaries (collectively the “Company”), for the periods indicated. It does not include all information and footnotes necessary for a fair presentation of financial position, results of operations, and cash flows in conformity with generally accepted accounting principles. All adjustments that were made are of normal recurring nature.

The unaudited condensed consolidated financial statements and notes are presented as permitted by the requirements for Form 10-Q and do not contain certain information included in our annual financial statements and notes. The condensed consolidated balance sheet data as of May 31, 2014 was derived from audited financial statements. The accompanying interim condensed consolidated financial statements should be read in conjunction with the financial statements and related notes included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) for the fiscal year ended May 31, 2014. The results of operations for our interim periods are not necessarily indicative of results to be achieved for our full fiscal year.

Note 2: Significant Accounting Policies

Principles of Consolidation

The condensed consolidated financial statements include the accounts of Biomerica, Inc. as well as its German subsidiary and Mexican subsidiary which have not begun operations. All significant intercompany accounts and transactions have been eliminated in consolidation.

Accounting Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported period. Actual results could materially differ from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents consist of demand deposits and money market accounts with original maturities of less than three months.

Accounts Receivable

The Company extends unsecured credit to its customers on a regular basis. International accounts are required to prepay until they establish a history with the Company and at that time, they are extended credit at levels based on a number of criteria. Credit levels are approved by designated upper level management. Domestic customers are extended initial credit limits until they establish a history with the Company or submit credit information. All increases in credit limits are also approved by designated upper level management. Management evaluates receivables on a quarterly basis and adjusts the reserve for bad debt accordingly. Balances over ninety days old are usually reserved for unless collection is reasonably assured. Management evaluates quarterly what items to charge off.  

Occasionally certain long-standing customers, who routinely place large orders, may have unusually large receivables balances relative to the total gross receivables. Management monitors the payments for these large balances closely and very often requires payment of existing invoices before shipping new sales orders. 

Inventories

The Company values inventory at the lower of cost (determined using a combination of specific lot identification and the first-in, first-out methods) or market. Management periodically reviews inventory for excess quantities and obsolescence. Management evaluates quantities on hand, physical condition, and technical functionality as these characteristics may be impacted by anticipated customer demand for current products and new product introductions. The reserve is adjusted based on such evaluation, with a corresponding provision included in cost of sales. Abnormal amounts of idle facility expenses, freight,handling costs and wasted material are recognized as current period charges and the allocation of fixed production overhead is based on the normal capacity of the Company’s production facilities.

4

Inventories approximate the following at:

	August 31, 2014		May 31, 2014
Raw materials	$	883,000	$	899,000
Work in progress		732,000		635,000
Finished products		265,000		232,000
Total	$	1,880,000	$	1,766,000

Reserves for inventory obsolescence are reduced as necessary to reduce obsolete inventory to estimated realizable value or to specifically reserve for obsolete inventory that the Company intends to dispose of.

Property and Equipment, net

Property and equipment are stated at cost. Expenditures for additions and major improvements are capitalized. Repairs and maintenance costs are charged to operations as incurred. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation or amortization is removed from the accounts, and gains or losses from retirements and dispositions are credited or charged to income.

Depreciation and amortization are provided over the estimated useful lives of the related assets, ranging from 5 to 10 years, using the straight-line method. Leasehold improvements are amortized over the lesser of the estimated useful life of the asset or the term of the lease. Depreciation and amortization expense on property and equipment and leasehold improvements amounted to $45,240 and $42,779 for the three months ended August 31, 2014 and 2013, respectively.

Intangible Assets, net

Intangible assets include trademarks, product rights, licenses, technology rights and patents, and are accounted for based on Accounting Standards Codification (“ASC”) 350 “Intangibles – Goodwill and Other” (ASC 350). In that regard, intangible assets that have indefinite useful lives are not amortized but are tested at least annually for impairment or more frequently if events or changes in circumstances indicate that the asset might be impaired. Intangible assets are being amortized using the straight-line method over the useful life; not to exceed 18 years for marketing and distribution rights, 10 years for purchased technology use rights, licenses, and 17 years for patents. Amortization amounted to $18,180 and $7,456 for the three months ended August 31, 2014 and 2013, respectively.

Stock-Based Compensation

The Company follows the guidance of the accounting provisions of ASC 718 “Share-based Compensation” (ASC 718), which requires the use of the fair-value based method to determine compensation for all arrangements under which employees and others receive shares of stock or equity instruments (options). The fair value of each option award is estimated on the date of grant using the Black-Scholes valuation model that uses assumptions for expected volatility, expected dividends, expected forfeiture rate, expected term, and the risk-free interest rate.

Expected volatilities are based on weighted averages of the historical volatility of the Company’s stock and other factors estimated over the expected term of the options. The expected forfeiture rate is based on historical forfeitures experienced. The expected term of options granted is derived using the “simplified method” which computes expected term as the average of the sum of the vesting term plus the contract term as historically the Company had limited activity surrounding its options. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for the period of the expected term.

5

The following summary presents the options and warrants granted, exercised, expired, cancelled and outstanding as of August 31, 2014:

		Exercise Price Weighted Average
	Option Shares
Outstanding May 31, 2014	860,500	$	0.51
Exercised	(8,250)	$	0.38
Outstanding August 31, 2014	852,250	$	0.51

       In the quarter ended August 31, 2014 options to acquire 8,250 shares of the Company’s common stock were exercised at the exercise prices ranging from $0.38 to $0.43 per share.  Net proceeds to the Company were $3,173.

Revenue Recognition

Revenues from product sales are recognized at the time the product is shipped, customarily FOB shipping point, at which point title passes. An allowance is established when necessary for estimated returns as revenue is recognized. In conjunction with sales to certain customers, the Company provides free products upon attaining certain levels of purchases by the customer. The Company accounts for these free products in accordance with ASC 605-50 “Revenue Recognition –Customer Payments and Incentives” and recognizes the cost of the product as part of cost of sales.

Investments

From time-to-time, the Company makes investments in privately-held companies. The Company determines whether the fair values of any investments in privately-held entities have declined below their carrying value whenever adverse events or changes in circumstances indicate that recorded values may not be recoverable.  If the Company considers any such decline to be other than temporary (based on various factors, including historical financial results, and the overall health of the investee’s industry), a write-down to estimated fair value is recorded. The Company currently has not written down the investment and no events have occurred which could indicate the carrying value to be less than the fair value. Investments represent the Company’s investment in a Polish distributor which is primarily engaged in distributing medical devices. The Company owns approximately 6% of the investee, and accordingly, applies the cost method to account for the investment.  Under the cost method, investments are recorded at cost, with gains and losses recognized as of the sale date, and income recorded when received.

Shipping and Handling Fees and Costs

Shipping and handling fees billed to customers are classified as net sales and shipping and handling costs are classified as cost of sales. The Company included shipping and handling fees billed to customers in net sales. The Company included shipping and handling costs associated with inbound freight and unreimbursed shipping to customers in cost of sales.

Research and Development

Research and development costs are expensed as incurred.

Income Taxes

The Company has provided a valuation allowance of $0 as of August 31, 2014 and May 31, 2014.  

      The Company did not record any income tax benefit for the three months ended August 31, 2014 as the Company is expected to generate profits later in fiscal 2015.

6

Foreign Currency Translation

The subsidiary located in Germany is accounted for primarily using local functional currency. Accordingly, assets and liabilities of this subsidiary are translated using exchange rates in effect at the end of the period, and revenues and costs are translated using average exchange rates for the period. The resulting adjustments are presented as a separate component of accumulated other comprehensive loss.

Deferred Rent

Incentive payments received from landlords are recorded as deferred lease incentives and are amortized over the underlying lease term on a straight-line basis as a reduction of rent expense. When the terms of an operating lease provide for periods of free rent, rent concessions, and/or rent escalations, the Company establishes a deferred rent liability for the difference between the scheduled rent payment and the straight-line rent expense recognized. This deferred rent liability is amortized over the underlying lease term on a straight-line basis as a reduction of rent expense.

Net Loss Per Share

Basic earnings (loss) per share are computed as net loss or income divided by the weighted average number of common shares outstanding for the period. Diluted (loss) income per share reflects the potential dilution that could occur from common shares issuable through stock options using the treasury stock method. The total amount of anti-dilutive warrants or options not included in the earnings per share calculation for the three months ended August 31, 2014 and 2013 was 852,250 and 864,500, respectively.

The following table illustrates the required disclosure of the reconciliation of the numerators and denominators of the basic and diluted earnings per share computations:

	Three Months Ended August 31,
	2014		2013
Numerator:
Loss from continuing operations	$	(219,268)	$	(167,714)
Denominator for basic net loss per common share		7,547,839		7,280,866
Effect of dilutive securities:
Options		-		-
Denominator for diluted net loss per common share		7,547,839		7,280,866
Basic net loss per common share	$	(0.03)	$	(0.02)
Diluted net loss per common share	$	(0.03)	$	(0.02)

New Accounting Pronouncements

     In May 2014, the FASB issued ASU 2014-09 “Revenue from Contracts with Customers” (ASU 2014-09).  ASU 2014-09 is a comprehensive new revenue recognition model requiring a company to recognize revenue to depict the transfer of goods or services to a customer at an amount reflecting the consideration it expects to receive in exchange for those goods or services. In adopting, ASU 2014-09, companies may use either a full retrospective or a modified retrospective approach. ASU 2014-09 is effective for the first interim period within annual reporting periods beginning December 15, 2016, and early adoption is not permitted.  Management is evaluating the provisions of this statement and has not determined what impact the adoption of ASU 2014-09 will have on the Company’s financial position or results of operations.

     Other recent ASU's issued by the FASB and guidance issued by the Securities and Exchange Commission did not, or are not believed by management to, have a material effect on the Company’s present or future consolidated financial statements.

7

Note 3: Accounts Payable and Accrued Expenses

      The Company’s accounts payable and accrued expense balances consist of the following at:

	August 31, 2014		May 31, 2014
Accounts payable	$	178,155	$	385,701
Deferred rent		52,289		55,980
Total	$	230,444	$	441,681

Note 4:  Shareholders’ Equity

     For the three months ended August 31, 2014, options to purchase 8,250 shares of the Company’s common stock were exercised.  See Note 2.

Note 5: Geographic Information

Financial information about foreign and domestic operations and export sales is approximately as follows:

	Three Months Ended
	August 31,
	2014		2013
Revenues from sales to unaffiliated customers:
United States	$	253,000	$	255,000
Asia		16,000		136,000
Europe		752,000		604,000
South America		3,000		3,000
Middle East		2,000		15,000
Other		9,000		1,000
	$	1,035,000	$	1,014,000

No other geographic concentrations exist where net sales exceed 10% of total net sales.

Note 6: Commitments and Contingencies

     In March 2014, the Company entered into a line of credit (the “Line”) with its bank which has a borrowing limit of $250,000.  The line is secured by substantially all of the Company’s assets, bears interest at 2.0% plus the Wall Street Journal Prime West Coast Edition prime rate.  At August 31, 2014 the Company had not drawn any funds on the line.

On June 18, 2009, the Company entered into an agreement to lease a building in Irvine, California. The lease commenced September 1, 2009 and ends August 31, 2016.  The initial base rent was set at $18,490per month with scheduled annual increases through the end of the lease term. The rent is currently set at $21,437.

Note 7:  Subsequent Events

On September 16, 2014, the Board of Directors approved the grant to various employees of options for 24,500 shares of common stock at the exercise price of $0.85 per share. The options are exercisable one quarter per year with the first quarter exercisable after one year and expire in five years from date of grant.

     On September 23, 2014, the Board of Directors approved the 2014 Stock Incentive Plan for 800,000 shares for future issuances of stock options to employees, officers, directors and others expected to provide significant services to the Company, which shall be submitted to the Company’s shareholders for final approval at the December 15, 2014 annual meeting.

8      

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

CERTAIN INFORMATION CONTAINED HEREIN (AS WELL AS INFORMATION INCLUDED IN ORAL STATEMENTS OR OTHER WRITTEN STATEMENTS MADE OR TO BE MADE BY BIOMERICA) CONTAINS STATEMENTS THAT ARE FORWARD-LOOKING, SUCH AS STATEMENTS RELATING TO ANTICIPATED FUTURE REVENUES OF THE COMPANY AND SUCCESS OR CURRENT PRODUCT OFFERINGS. SUCH FORWARD-LOOKING INFORMATION INVOLVES IMPORTANT RISKS AND UNCERTAINTIES THAT COULD SIGNIFICANTLY AFFECT ANTICIPATED RESULTS IN THE FUTURE, AND ACCORDINGLY, SUCH RESULTS MAY DIFFER MATERIALLY FROM THOSE EXPRESSED IN ANY FORWARD-LOOKING STATEMENTS MADE BY OR ON BEHALF OF BIOMERICA. THE POTENTIAL RISKS AND UNCERTAINTIES INCLUDE, AMONG OTHERS, FLUCTUATIONS IN THE COMPANY'S OPERATING RESULTS. THESE RISKS AND UNCERTAINTIES ALSO INCLUDE THE SUCCESS OF THE COMPANY IN RAISING NEEDED CAPITAL, THE ABILITY OF THE COMPANY TO MAINTAIN REQUIREMENTS TO BE LISTED ON NASDAQ, THE CONTINUAL DEMAND FOR THE COMPANY'S PRODUCTS, COMPETITIVE AND ECONOMIC FACTORS OF THE MARKETPLACE, AVAILABILITY OF RAW MATERIALS, HEALTH CARE REGULATIONS AND THE STATE OF THE ECONOMY. READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE HEREOF, AND THE COMPANY UNDERTAKES NO OBLIGATION TO UPDATE THESE FORWARD-LOOKING STATEMENTS.

OVERVIEW

Biomerica, Inc. and Subsidiaries ("Biomerica", the "Company", "we" or "our") develops, manufactures, and markets medical diagnostic products designed for the early detection and monitoring of chronic diseases and medical conditions. Our medical diagnostic products are sold worldwide in two markets: 1) clinical laboratories and 2) point of care (physicians' offices and over-the-counter drugstores). Our diagnostic test kits are used to analyze blood or urine from patients in the diagnosis of various diseases and other medical complications, or to measure the level of specific hormones, antibodies, antigens or other substances, which may exist in the human body in extremely small concentrations.

RESULTS OF OPERATIONS

Consolidated net sales for Biomerica were $1,034,450 for the three months ended August 31, 2014 as compared to $1,013,739 for the same period in the previous year. This represents an increase of $20,711. The increase was primarily due to an increase of sales in Europe of $148,000 which was offset by a decrease of $120,000 in Asia.

       For the three months ended August 31, 2014 as compared to August 31, 2013, cost of sales decreased as a percentage of sales from 74.3% of sales, or $753,448, to 70.0% of sales, or $724,539.  Cost of sales as a percentage of sales decreased due to lower wages and royalties as well as product mix.        

       For the three months ended August 31, 2014 compared to 2013, selling, general and administrative costs decreased by $4,486, or 1.3%.

       For the three months ended August 31, 2014 and 2013, research and development expenses were $195,706 as compared to $91,257, an increase of $104,449, or 114.5%. The increase was due to costs incurred in the improvement, development and approval of new and existing products in the gastroenterology area.

       For the three months ended August 31, 2014 as compared to August 31, 2013, dividend and interest income and interest expense decreased from $6,054 to $4,861.

9

LIQUIDITY AND CAPITAL RESOURCES

       As of August 31, 2014 and May 31, 2014, the Company had cash and cash equivalents in the amount of $1,646,978 and $1,509,125 and working capital of $4,188,841 and $4,357,330, respectively.

       During the three months ended August 31, 2014 the Company’s operations provided cash of $143,641 compared to cash used of $376,271 in the same period of the prior fiscal year. Cash provided by operations in fiscal 2015 was a result of net loss of $219,268, an increase in inventory of $135,203, and pay down of accounts payables and accrued expenses of $207,546 which were offset by collections of accounts receivables of $675,047. Cash used in investing activities in the three months ended August 31, 2014 was $1,775 compared to the three months ended August 31, 2013 of $8,731. Both years the use of funds was for the purchase of property and equipment.  Cash used in financing activities in the three months ended August 31, 2014 was $3,079 compared to cash provided by financing activities of $760 in the three months ended August 31, 2013. The decrease in fiscal 2015 was a result of $6,252 used for intangible assets which was offset by the exercise of stock options of $3,173.

     In March 2014, the Company entered into a line of credit (the “Line”) with its bank which has a borrowing limit of $250,000.  The line is secured by substantially all of the Company’s assets, bears interest at 2.0% plus the Wall Street Journal Prime West Coast Edition prime rate.  At August 31, 2014 the Company had not drawn any funds on the line.

Off Balance Sheet Arrangements – None.

CRITICAL ACCOUNTING POLICIES

The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make a number of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Such estimates and assumptions affect the reported amounts of revenues and expenses during the reporting period. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements. On an ongoing basis, we evaluate estimates and assumptions based upon historical experience and various other factors and circumstances. We believe our estimates and assumptions are reasonable in the circumstances; however, actual results may differ from these estimates under different future conditions.

We believe that the estimates and assumptions that are most important to the portrayal of our financial condition and results of operations, in that they require subjective or complex judgments, form the basis for the accounting policies deemed to be most critical to us. These relate to revenue recognition, bad debts, inventory overhead application, and inventory reserve. We believe estimates and assumptions related to these critical accounting policies are appropriate under the circumstances; however, should future events or occurrences result in unanticipated consequences, there could be a material impact on our future financial conditions or results of operations. We suggest that our significant accounting policies be read in conjunction with this Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

       We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

Item 4.  CONTROLS AND PROCEDURES

         Our management evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, as of the end of the period covered by this report. Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. The disclosure controls and procedures have been designed to provide reasonable assurance of achieving their objectives and the Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective at the "reasonable assurance" level. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective to ensure that information required to be disclosed in the reports that we file and submit under the Exchange Act is (1) recorded, processed, summarized and reported within the time periods specified in the Commission's rules and forms; and (2) accumulated and communicated to the Company's management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

         There have been no changes in our internal control over financial reporting identified in connection with the evaluation that occurred during our last fiscal quarter that has materially affected, or that is reasonably likely to materially affect, our internal control over financial reporting.

10

PART II. OTHER INFORMATION

Item 1.  LEGAL PROCEEDINGS.  None.

Item 1A. RISKS AND UNCERTAINTIES.

You should read the following factors in conjunction with the factors discussed elsewhere in this and our other filings with the Securities and Exchange Commission and in materials incorporated by reference in these filings. The following is intended to highlight certain factors that may affect the financial condition and results of operations of Biomerica, Inc. and are not meant to be an exhaustive discussion of risks that apply to companies such as Biomerica, Inc. Like other businesses, Biomerica, Inc. is susceptible to macroeconomic downturns in the United States or abroad, as were experienced in recent history that may affect the general economic climate and performance of Biomerica, Inc. or its customers.

Aside from general macroeconomic downturns, the additional material factors that could affect future financial results include, but are not limited to: Terrorist attacks and the impact of such events; diminished access to raw materials that directly enter into our manufacturing process; shipping labor disruption or other major degradation of the ability to ship our products to end users; inability to successfully control our margins which are affected by many factors including competition and product mix; protracted shutdown of the U.S. border due to an escalation of terrorist or counter terrorist activity; any changes in our business relationships with international distributors or the economic climate they operate in; any event that has a material adverse impact on our foreign manufacturing operations may adversely affect our operations as a whole; failure to manage the future expansion of our business could have a material adverse effect on our revenues and profitability; possible costs or difficulty in complying with government regulations and the delays in receiving required regulatory approvals or the enactment of new adverse regulations or regulatory requirements; numerous competitors, some of which have substantially greater financial and other resources than we do; potential claims and litigation brought by patients or medical professionals alleging harm caused by the use of or exposure to our products; quarterly variations in operating results caused by a number of factors, including business and industry conditions; concentrations of sales with certain distributions could adversely affect the results of the Company if the Company were to lose the sales of that distributor and other factors beyond our control; high balances carried on accounts receivables from concentrated customers; and the costs of recalls, should such occasion arise.  All these factors make it difficult to predict operating results for any particular period.

Item 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. None. 

Item 3.  DEFAULTS UPON SENIOR SECURITIES.  None. 

Item 4.  MINE SAFETY DISCLOSURES. None. 

Item 5.  OTHER INFORMATION.  None.

Item 6.  EXHIBITS.

The following exhibits are filed or furnished as part of this quarterly report on Form 10-Q:

Exhibit No.			Description
	31.1	*	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act — Zackary S. Irani
	31.2	*	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act — Janet Moore
	32.1	*	Certification Pursuant to Section 906 of the Sarbanes-Oxley Act — Zackary S. Irani
	32.2	*	Certification Pursuant to Section 906 of the Sarbanes-Oxley Act — Janet Moore
101 Interactive data files pursuant to Rule 405 Regulation S-T, as follows:
101.INS-XBRL Instance Document
101.SCH-XBRL Taxonomy Extension Schema Document 101.CAL-XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF–XBRL Taxonomy Extension Definition Linkbase Document 101.LAB-XBRL Taxonomy Extension Label Linkbase Document 101.PRE-XBRL Taxonomy Extension Presentation Linkbase Document
*Filed herewith.

11

SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has fully caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	BIOMERICA, INC.
Date: October 15, 2014
	By:	/S/ Zackary S. Irani
		Zackary S. Irani
		Chief Executive Officer
		(Principal Executive Officer)

Date: October 15, 2014
	By:	/S/ Janet Moore
		Janet Moore
		Chief Financial Officer
		(Principal Financial Officer)

12

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Zackary S. Irani, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Biomerica, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information  included in this report, fairly present in all material respects, the financial condition,  results of operations and cash flows of the registrant as of, and for, the periods presented  in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

      a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiary, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

      b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

      c) evaluated the effectiveness of the registrant's disclosure controls and

procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

      d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of our internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or other persons performing the equivalent functions):

      a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

      b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: October 15, 2014

/s/ Zackary S. Irani

------------------------

Zackary S. Irani

Chief Executive Officer

(Principal Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Janet Moore, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Biomerica, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects, the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

      a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiary, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

      b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

      c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

      d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of our internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or other persons performing the equivalent functions):

      a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

      b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over sfinancial reporting.

Date: October 15, 2014

/s/ Janet Moore

-----------------------

Janet Moore

Chief Financial Officer

(Principal Financial Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Biomerica, Inc. (the "Company") on Form 10-Q for the period ending August 31, 2014, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Zackary Irani, Chief Executive Officer of the Company, certify, to the best of my knowledge, Pursuant to Exchange Act Rule 15d-14(b) and 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes Oxley Act of 2002,

i.   The Report fully complies with the requirements of Sections 13(a) or 15(d) of the Securities Exchange Act of 1934, and

ii.  The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Zackary S. Irani

-----------------------

Zackary S. Irani

Chief Executive Officer

Date: October 15, 2014

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Biomerica, Inc. (the "Company") on Form 10-Q for the period ending August 31, 2014, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Janet Moore, Chief Financial Officer of the Company, certify, to the best of my knowledge, Pursuant to Exchange Act Rule 15d-14(b) and 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes Oxley Act of 2002,

i.   The Report fully complies with the requirements of Sections 13(a) or 15(d)of the Securities Exchange Act of 1934, and

ii.  The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Janet Moore

-----------------------

Janet Moore

Chief Financial Officer

Date: October 15, 2014

XML

Commitments and Contingencies (Details) (USD $)	3 Months Ended
	Aug. 31, 2014
Commitments and Contingencies (Details) [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity	$ 250,000
Line of Credit Facility, Interest Rate Description	2.0% plus the Wall Street Journal Prime West Coast Edition prime rate
Line of Credit [Member]
Commitments and Contingencies (Details) [Line Items]
Debt Instrument, Basis Spread on Variable Rate	2.00%
Building in Irvine California [Member]
Commitments and Contingencies (Details) [Line Items]
Lease Agreement Date	Jun. 18, 2009
Lease Initiation Date	Sep. 01, 2009
Lease Expiration Date	Aug. 31, 2016
Operating Leases, Rent Expense, Minimum Rentals	18,490
Operating Leases, Rent Expense	$ 21,437

XML

Shareholders' Equity

3 Months Ended

Aug. 31, 2014

Stockholders' Equity Note [Abstract]

Stockholders' Equity Note Disclosure [Text Block]

Note 4:  Shareholders’ Equity

     For the three months ended August 31, 2014, options to purchase 8,250 shares of the Company’s common stock were exercised.  See Note 2.

XML

Accounts Payable and Accrued Expenses

3 Months Ended

Aug. 31, 2014

Payables and Accruals [Abstract]

Accounts Payable and Accrued Liabilities Disclosure [Text Block]

Note 3: Accounts Payable and Accrued Expenses

      The Company’s accounts payable and accrued expense balances consist of the following at:

	August 31, 2014		May 31, 2014
Accounts payable	$	178,155	$	385,701
Deferred rent		52,289		55,980
Total	$	230,444	$	441,681

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME (UNAUDITED) (USD $)	3 Months Ended
	Aug. 31, 2014	Aug. 31, 2013
Net sales	$ 1,034,450	$ 1,013,739
Cost of sales	(724,539)	(753,448)
Gross profit	309,911	260,291
Operating Expenses:
Selling, general and administrative	338,316	342,802
Research and development	195,706	91,257
Total operating expenses	534,022	434,059
Loss from operations	(224,111)	(173,768)
Other Income (Expense):
Dividend and interest income	4,861	6,054
Interest expense	(18)
Total other income	4,843	6,054
Loss before income tax	(219,268)	(167,714)
Provision for income taxes
Net loss	(219,268)	(167,714)
Basic net loss per common share (in Dollars per share)	$ (0.03)	$ (0.02)
Diluted net loss per common share (in Dollars per share)	$ (0.03)	$ (0.02)
Weighted average number of common and Common Equivalent Shares:
Basic (in Shares)	7,547,839	7,280,866
Diluted (in Shares)	7,547,839	7,280,866
Net loss	(219,268)	(167,714)
Other comprehensive loss, net of tax:
Foreign currency translation	(934)	(91)
Comprehensive loss	$ (220,202)	$ (167,805)

XML

Basis of Presentation

3 Months Ended

Aug. 31, 2014

Disclosure Text Block [Abstract]

Basis of Accounting [Text Block]

Note 1: Basis of Presentation

The information set forth in these condensed consolidated statements is unaudited and reflects all adjustments which, in the opinion of management, are necessary to present a fair statement of the consolidated results of operations of Biomerica, Inc. and Subsidiaries (collectively the “Company”), for the periods indicated. It does not include all information and footnotes necessary for a fair presentation of financial position, results of operations, and cash flows in conformity with generally accepted accounting principles. All adjustments that were made are of normal recurring nature.

The unaudited condensed consolidated financial statements and notes are presented as permitted by the requirements for Form 10-Q and do not contain certain information included in our annual financial statements and notes. The condensed consolidated balance sheet data as of May 31, 2014 was derived from audited financial statements. The accompanying interim condensed consolidated financial statements should be read in conjunction with the financial statements and related notes included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) for the fiscal year ended May 31, 2014. The results of operations for our interim periods are not necessarily indicative of results to be achieved for our full fiscal year.

XML

Shareholders' Equity (Details)	3 Months Ended
	Aug. 31, 2014
Stockholders' Equity Note [Abstract]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period	8,250

XML

Geographic Information (Details) - Financial information about foreign and domestic operations and export sales (USD $)	3 Months Ended
	Aug. 31, 2014	Aug. 31, 2013
Revenues from sales to unaffiliated customers:
Net sales	$ 1,034,450	$ 1,013,739
UNITED STATES
Revenues from sales to unaffiliated customers:
Net sales	253,000	255,000
Asia [Member]
Revenues from sales to unaffiliated customers:
Net sales	16,000	136,000
Europe [Member]
Revenues from sales to unaffiliated customers:
Net sales	752,000	604,000
South America [Member]
Revenues from sales to unaffiliated customers:
Net sales	3,000	3,000
Middle East [Member]
Revenues from sales to unaffiliated customers:
Net sales	2,000	15,000
Other Foreign [Member]
Revenues from sales to unaffiliated customers:
Net sales	$ 9,000	$ 1,000

XML

Significant Accounting Policies

3 Months Ended

Aug. 31, 2014

Accounting Policies [Abstract]

Significant Accounting Policies [Text Block]

Note 2: Significant Accounting Policies

Principles of Consolidation

The condensed consolidated financial statements include the accounts of Biomerica, Inc. as well as its German subsidiary and Mexican subsidiary which have not begun operations. All significant intercompany accounts and transactions have been eliminated in consolidation.

Accounting Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported period. Actual results could materially differ from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents consist of demand deposits and money market accounts with original maturities of less than three months.

Accounts Receivable

The Company extends unsecured credit to its customers on a regular basis.  International accounts are required to prepay until they establish a history with the Company and at that time, they are extended credit at levels based on a number of criteria.  Credit levels are approved by designated upper level management.  Domestic customers are extended initial credit limits until they establish a history with the Company or submit credit information.  All increases in credit limits are also approved by designated upper level management.  Management evaluates receivables on a quarterly basis and adjusts the reserve for bad debt accordingly.  Balances over ninety days old are usually reserved for unless collection is reasonably assured.  Management evaluates quarterly what items to charge off.  

Occasionally certain long-standing customers, who routinely place large orders, may have unusually large receivables balances relative to the total gross receivables.  Management monitors the payments for these large balances closely and very often requires payment of existing invoices before shipping new sales orders. 

Inventories

The Company values inventory at the lower of cost (determined using a combination of specific lot identification and the first-in, first-out methods) or market. Management periodically reviews inventory for excess quantities and obsolescence. Management evaluates quantities on hand, physical condition, and technical functionality as these characteristics may be impacted by anticipated customer demand for current products and new product introductions. The reserve is adjusted based on such evaluation, with a corresponding provision included in cost of sales. Abnormal amounts of idle facility expenses, freight,handling costs and wasted material are recognized as current period charges and the allocation of fixed production overhead is based on the normal capacity of the Company’s production facilities.

Inventories approximate the following at:

	August 31, 2014		May 31, 2014
Raw materials	$	883,000	$	899,000
Work in progress		732,000		635,000
Finished products		265,000		232,000
Total	$	1,880,000	$	1,766,000

Reserves for inventory obsolescence are reduced as necessary to reduce obsolete inventory to estimated realizable value or to specifically reserve for obsolete inventory that the Company intends to dispose of.

Property and Equipment, net

Property and equipment are stated at cost. Expenditures for additions and major improvements are capitalized. Repairs and maintenance costs are charged to operations as incurred. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation or amortization is removed from the accounts, and gains or losses from retirements and dispositions are credited or charged to income.

Depreciation and amortization are provided over the estimated useful lives of the related assets, ranging from 5 to 10 years, using the straight-line method. Leasehold improvements are amortized over the lesser of the estimated useful life of the asset or the term of the lease. Depreciation and amortization expense on property and equipment and leasehold improvements amounted to $45,240 and $42,779 for the three months ended August 31, 2014 and 2013, respectively.

Intangible Assets, net

Intangible assets include trademarks, product rights, licenses, technology rights and patents, and are accounted for based on Accounting Standards Codification (“ASC”) 350 “Intangibles – Goodwill and Other” (ASC 350). In that regard, intangible assets that have indefinite useful lives are not amortized but are tested at least annually for impairment or more frequently if events or changes in circumstances indicate that the asset might be impaired. Intangible assets are being amortized using the straight-line method over the useful life; not to exceed 18 years for marketing and distribution rights, 10 years for purchased technology use rights, licenses, and 17 years for patents. Amortization amounted to $18,180 and $7,456 for the three months ended August 31, 2014 and 2013, respectively.

Stock-Based Compensation

The Company follows the guidance of the accounting provisions of ASC 718 “Share-based Compensation” (ASC 718), which requires the use of the fair-value based method to determine compensation for all arrangements under which employees and others receive shares of stock or equity instruments (options). The fair value of each option award is estimated on the date of grant using the Black-Scholes valuation model that uses assumptions for expected volatility, expected dividends, expected forfeiture rate, expected term, and the risk-free interest rate.

Expected volatilities are based on weighted averages of the historical volatility of the Company’s stock and other factors estimated over the expected term of the options. The expected forfeiture rate is based on historical forfeitures experienced. The expected term of options granted is derived using the “simplified method” which computes expected term as the average of the sum of the vesting term plus the contract term as historically the Company had limited activity surrounding its options. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for the period of the expected term.

The following summary presents the options and warrants granted, exercised, expired, cancelled and outstanding as of August 31, 2014:

		Exercise Price Weighted Average
	Option Shares
Outstanding May 31, 2014	860,500	$	0.51
Exercised	(8,250)	$	0.38
Outstanding August 31, 2014	852,250	$	0.51

       In the quarter ended August 31, 2014 options to acquire 8,250 shares of the Company’s common stock were exercised at the exercise prices ranging from $0.38 to $0.43 per share.  Net proceeds to the Company were $3,173.

Revenue Recognition

Revenues from product sales are recognized at the time the product is shipped, customarily FOB shipping point, at which point title passes. An allowance is established when necessary for estimated returns as revenue is recognized. In conjunction with sales to certain customers, the Company provides free products upon attaining certain levels of purchases by the customer. The Company accounts for these free products in accordance with ASC 605-50 “Revenue Recognition – Customer Payments and Incentives” and recognizes the cost of the product as part of cost of sales.

Investments

From time-to-time, the Company makes investments in privately-held companies.  The Company determines whether the fair values of any investments in privately-held entities have declined below their carrying value whenever adverse events or changes in circumstances indicate that recorded values may not be recoverable.  If the Company considers any such decline to be other than temporary (based on various factors, including historical financial results, and the overall health of the investee’s industry), a write-down to estimated fair value is recorded.  The Company currently has not written down the investment and no events have occurred which could indicate the carrying value to be less than the fair value. Investments represent the Company’s investment in a Polish distributor which is primarily engaged in distributing medical devices.  The Company owns approximately 6% of the investee, and accordingly, applies the cost method to account for the investment.  Under the cost method, investments are recorded at cost, with gains and losses recognized as of the sale date, and income recorded when received.

Shipping and Handling Fees and Costs

Shipping and handling fees billed to customers are classified as net sales and shipping and handling costs are classified as cost of sales. The Company included shipping and handling fees billed to customers in net sales. The Company included shipping and handling costs associated with inbound freight and unreimbursed shipping to customers in cost of sales.

Research and Development

Research and development costs are expensed as incurred.

Income Taxes

The Company has provided a valuation allowance of $0 as of August 31, 2014 and May 31, 2014.  

      The Company did not record any income tax benefit for the three months ended August 31, 2014 as the Company is expected to generate profits later in fiscal 2015.

Foreign Currency Translation

The subsidiary located in Germany is accounted for primarily using local functional currency. Accordingly, assets and liabilities of this subsidiary are translated using exchange rates in effect at the end of the period, and revenues and costs are translated using average exchange rates for the period. The resulting adjustments are presented as a separate component of accumulated other comprehensive loss.

Deferred Rent

Incentive payments received from landlords are recorded as deferred lease incentives and are amortized over the underlying lease term on a straight-line basis as a reduction of rent expense. When the terms of an operating lease provide for periods of free rent, rent concessions, and/or rent escalations, the Company establishes a deferred rent liability for the difference between the scheduled rent payment and the straight-line rent expense recognized. This deferred rent liability is amortized over the underlying lease term on a straight-line basis as a reduction of rent expense.

Net Loss Per Share

Basic earnings (loss) per share are computed as net loss or income divided by the weighted average number of common shares outstanding for the period. Diluted (loss) income per share reflects the potential dilution that could occur from common shares issuable through stock options using the treasury stock method. The total amount of anti-dilutive warrants or options not included in the earnings per share calculation for the three months ended August 31, 2014 and 2013 was 852,250 and 864,500, respectively.

The following table illustrates the required disclosure of the reconciliation of the numerators and denominators of the basic and diluted earnings per share computations:

	Three Months Ended August 31,
	2014		2013
Numerator:
Loss from continuing operations	$	(219,268)	$	(167,714)
Denominator for basic net loss per common share		7,547,839		7,280,866
Effect of dilutive securities:
Options		-		-
Denominator for diluted net loss per common share		7,547,839		7,280,866
Basic net loss per common share	$	(0.03)	$	(0.02)
Diluted net loss per common share	$	(0.03)	$	(0.02)

New Accounting Pronouncements

     In May 2014, the FASB issued ASU 2014-09 “Revenue from Contracts with Customers” (ASU 2014-09).  ASU 2014-09 is a comprehensive new revenue recognition model requiring a company to recognize revenue to depict the transfer of goods or services to a customer at an amount reflecting the consideration it expects to receive in exchange for those goods or services.  In adopting, ASU 2014-09, companies may use either a full retrospective or a modified retrospective approach.  ASU 2014-09 is effective for the first interim period within annual reporting periods beginning December 15, 2016, and early adoption is not permitted.  Management is evaluating the provisions of this statement and has not determined what impact the adoption of ASU 2014-09 will have on the Company’s financial position or results of operations.

     Other recent ASU's issued by the FASB and guidance issued by the Securities and Exchange Commission did not, or are not believed by management to, have a material effect on the Company’s present or future consolidated financial statements.

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (USD $)	Aug. 31, 2014	May 31, 2014
Current Assets:
Cash and cash equivalents	$ 1,646,978	$ 1,509,125
Accounts receivable, less allowance for doubtful accounts of $14,459 and $30,000 as of August 31, 2014 and May 31, 2014, respectively	788,199	1,447,705
Inventories, net	1,880,193	1,765,772
Prepaid expenses and other	135,196	103,572
Deferred tax assets, current portion	87,000	87,000
Total current assets	4,537,566	4,913,174
Property and Equipment, net of accumulated depreciation & amortization	571,538	614,337
Deferred Tax Assets, net of current portion	359,000	359,000
Investments	165,324	165,324
Intangible Assets, net	370,253	382,181
Other Assets	43,498	36,297
Total Assets	6,047,179	6,470,313
Current Liabilities:
Accounts payable and accrued expenses	230,444	441,681
Accrued compensation	118,281	114,163
Total Current Liabilities	348,725	555,844
Commitments and Contingencies (Note 6)
Shareholders' Equity:
Preferred stock, no par value authorized 5,000,000 shares, none issued and none outstanding at August 31, 2014 and May 31, 2014
Common stock, $0.08 par value authorized 25,000,000 shares, issued and outstanding 7,551,964 and 7,543,714 at August 31 and May 31, 2014, respectively	604,156	603,496
Additional paid-in-capital	18,312,681	18,309,154
Accumulated other comprehensive loss	(11,083)	(10,149)
Accumulated deficit	(13,207,300)	(12,988,032)
Total Shareholders' Equity	5,698,454	5,914,469
Total Liabilities and Shareholders' Equity	$ 6,047,179	$ 6,470,313

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Significant Accounting Policies (Details) (USD $)	3 Months Ended
	Aug. 31, 2014	Aug. 31, 2013
Significant Accounting Policies (Details) [Line Items]
Amortization of Intangible Assets	$ 18,180	$ 7,456
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period (in Shares)	8,250
Share-based Compensation Arrangements by Share-based Payment Award, Options, Exercises in Period, Weighted Average Exercise Price (in Dollars per share)	$ 0.38
Proceeds from Stock Options Exercised	3,173	760
Equity Method Investment, Ownership Percentage	6.00%
Deferred Tax Assets, Valuation Allowance	0	0
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in Shares)	852,250	864,500
Property Plant And Equipment And Leasehold Improvements [Member]
Significant Accounting Policies (Details) [Line Items]
Depreciation, Depletion and Amortization	$ 45,240	$ 42,779
Marketing And Distribution Rights [Member]
Significant Accounting Policies (Details) [Line Items]
Finite-Lived Intangible Asset, Useful Life	18 years
Purchased Technology Use Rights and Licenses [Member]
Significant Accounting Policies (Details) [Line Items]
Finite-Lived Intangible Asset, Useful Life	10 years
Patents [Member]
Significant Accounting Policies (Details) [Line Items]
Finite-Lived Intangible Asset, Useful Life	17 years
Maximum [Member]
Significant Accounting Policies (Details) [Line Items]
Property, Plant and Equipment, Useful Life	10 years
Share-based Compensation Arrangements by Share-based Payment Award, Options, Exercises in Period, Weighted Average Exercise Price (in Dollars per share)	$ 0.43
Minimum [Member]
Significant Accounting Policies (Details) [Line Items]
Property, Plant and Equipment, Useful Life	5 years
Share-based Compensation Arrangements by Share-based Payment Award, Options, Exercises in Period, Weighted Average Exercise Price (in Dollars per share)	$ 0.38

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Document And Entity Information	3 Months Ended
	Aug. 31, 2014	Oct. 15, 2014
Document and Entity Information [Abstract]
Entity Registrant Name	BIOMERICA INC.
Document Type	10-Q
Current Fiscal Year End Date	--05-31
Entity Common Stock, Shares Outstanding		7,551,964
Amendment Flag	false
Entity Central Index Key	0000073290
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Smaller Reporting Company
Entity Well-known Seasoned Issuer	No
Document Period End Date	Aug. 31, 2014
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q1

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Significant Accounting Policies (Details) - Inventories (USD $)	Aug. 31, 2014	May 31, 2014
Inventories [Abstract]
Raw materials	$ 883,000	$ 899,000
Work in progress	732,000	635,000
Finished products	265,000	232,000
Total	$ 1,880,193	$ 1,765,772

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parentheticals) (USD $)	Aug. 31, 2014	May 31, 2014
Allowance for doubtful accounts (in Dollars)	$ 14,459	$ 30,000
Preferred stock, No Par Value (in Dollars per share)	$ 0	$ 0
Preferred stock, Shares authorized	5,000,000	5,000,000
Preferred stock, Shares Issued	0	0
Preferred stock, Shares Outstanding	0	0
Common stock, Par Value (in Dollars per share)	$ 0.08	$ 0.08
Common stock, Shares Authorized	25,000,000	25,000,000
Common stock, Shares Issued	7,551,964	7,543,714
Common stock, Shares Outstanding	7,551,964	7,543,714

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Subsequent Events

3 Months Ended

Aug. 31, 2014

Subsequent Events [Abstract]

Subsequent Events [Text Block]

Note 7:  Subsequent Events

On September 16, 2014, the Board of Directors approved the grant to various employees of options for 24,500 shares of common stock at the exercise price of $0.85 per share. The options are exercisable one quarter per year with the first quarter exercisable after one year and expire in five years from date of grant.

     On September 23, 2014, the Board of Directors approved the 2014 Stock Incentive Plan for 800,000 shares for future issuances of stock options to employees, officers, directors and others expected to provide significant services to the Company, which shall be submitted to the Company’s shareholders for final approval at the December 15, 2014 annual meeting.

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Commitments and Contingencies

3 Months Ended

Aug. 31, 2014

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure [Text Block]

Note 6: Commitments and Contingencies

     In March 2014, the Company entered into a line of credit (the “Line”) with its bank which has a borrowing limit of $250,000.  The line is secured by substantially all of the Company’s assets, bears interest at 2.0% plus the Wall Street Journal Prime West Coast Edition prime rate.  At August 31, 2014 the Company had not drawn any funds on the line.

On June 18, 2009, the Company entered into an agreement to lease a building in Irvine, California. The lease commenced September 1, 2009 and ends August 31, 2016.  The initial base rent was set at $18,490 per month with scheduled annual increases through the end of the lease term. The rent is currently set at $21,437.

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Geographic Information (Details) (Geographic Concentration Risk [Member])	3 Months Ended
	Aug. 31, 2014
Geographic Concentration Risk [Member]
Geographic Information (Details) [Line Items]
Concentration Risk, Percentage	10.00%

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Significant Accounting Policies (Details) - Options and warrants (USD $)	3 Months Ended
	Aug. 31, 2014
Options and warrants [Abstract]
Outstanding May 31, 2014	860,500
Outstanding May 31, 2014	$ 0.51
Exercised	(8,250)
Exercised	$ 0.38
Outstanding August 31, 2014	852,250
Outstanding August 31, 2014	$ 0.51

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Accounts Payable and Accrued Expenses (Tables)

3 Months Ended

Aug. 31, 2014

Payables and Accruals [Abstract]

Schedule of Accounts Payable and Accrued Liabilities [Table Text Block]

	August 31, 2014		May 31, 2014
Accounts payable	$	178,155	$	385,701
Deferred rent		52,289		55,980
Total	$	230,444	$	441,681

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Accounting Policies, by Policy (Policies)

3 Months Ended

Aug. 31, 2014

Accounting Policies [Abstract]

Consolidation, Policy [Policy Text Block]

Principles of Consolidation

The condensed consolidated financial statements include the accounts of Biomerica, Inc. as well as its German subsidiary and Mexican subsidiary which have not begun operations. All significant intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates, Policy [Policy Text Block]

Accounting Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported period. Actual results could materially differ from those estimates.

Cash and Cash Equivalents, Policy [Policy Text Block]

Cash and Cash Equivalents

Cash and cash equivalents consist of demand deposits and money market accounts with original maturities of less than three months.

Trade and Other Accounts Receivable, Policy [Policy Text Block]

Accounts Receivable

The Company extends unsecured credit to its customers on a regular basis.  International accounts are required to prepay until they establish a history with the Company and at that time, they are extended credit at levels based on a number of criteria.  Credit levels are approved by designated upper level management.  Domestic customers are extended initial credit limits until they establish a history with the Company or submit credit information.  All increases in credit limits are also approved by designated upper level management.  Management evaluates receivables on a quarterly basis and adjusts the reserve for bad debt accordingly.  Balances over ninety days old are usually reserved for unless collection is reasonably assured.  Management evaluates quarterly what items to charge off.  

Occasionally certain long-standing customers, who routinely place large orders, may have unusually large receivables balances relative to the total gross receivables.  Management monitors the payments for these large balances closely and very often requires payment of existing invoices before shipping new sales orders.

Inventory, Policy [Policy Text Block]

Inventories

The Company values inventory at the lower of cost (determined using a combination of specific lot identification and the first-in, first-out methods) or market. Management periodically reviews inventory for excess quantities and obsolescence. Management evaluates quantities on hand, physical condition, and technical functionality as these characteristics may be impacted by anticipated customer demand for current products and new product introductions. The reserve is adjusted based on such evaluation, with a corresponding provision included in cost of sales. Abnormal amounts of idle facility expenses, freight,handling costs and wasted material are recognized as current period charges and the allocation of fixed production overhead is based on the normal capacity of the Company’s production facilities.

Inventories approximate the following at:

	August 31, 2014		May 31, 2014
Raw materials	$	883,000	$	899,000
Work in progress		732,000		635,000
Finished products		265,000		232,000
Total	$	1,880,000	$	1,766,000

Reserves for inventory obsolescence are reduced as necessary to reduce obsolete inventory to estimated realizable value or to specifically reserve for obsolete inventory that the Company intends to dispose of.

Property, Plant and Equipment, Policy [Policy Text Block]

Property and Equipment, net

Property and equipment are stated at cost. Expenditures for additions and major improvements are capitalized. Repairs and maintenance costs are charged to operations as incurred. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation or amortization is removed from the accounts, and gains or losses from retirements and dispositions are credited or charged to income.

Depreciation and amortization are provided over the estimated useful lives of the related assets, ranging from 5 to 10 years, using the straight-line method. Leasehold improvements are amortized over the lesser of the estimated useful life of the asset or the term of the lease. Depreciation and amortization expense on property and equipment and leasehold improvements amounted to $45,240 and $42,779 for the three months ended August 31, 2014 and 2013, respectively.

Goodwill and Intangible Assets, Intangible Assets, Policy [Policy Text Block]

Intangible Assets, net

Intangible assets include trademarks, product rights, licenses, technology rights and patents, and are accounted for based on Accounting Standards Codification (“ASC”) 350 “Intangibles – Goodwill and Other” (ASC 350). In that regard, intangible assets that have indefinite useful lives are not amortized but are tested at least annually for impairment or more frequently if events or changes in circumstances indicate that the asset might be impaired. Intangible assets are being amortized using the straight-line method over the useful life; not to exceed 18 years for marketing and distribution rights, 10 years for purchased technology use rights, licenses, and 17 years for patents. Amortization amounted to $18,180 and $7,456 for the three months ended August 31, 2014 and 2013, respectively.

Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block]

Stock-Based Compensation

The Company follows the guidance of the accounting provisions of ASC 718 “Share-based Compensation” (ASC 718), which requires the use of the fair-value based method to determine compensation for all arrangements under which employees and others receive shares of stock or equity instruments (options). The fair value of each option award is estimated on the date of grant using the Black-Scholes valuation model that uses assumptions for expected volatility, expected dividends, expected forfeiture rate, expected term, and the risk-free interest rate.

Expected volatilities are based on weighted averages of the historical volatility of the Company’s stock and other factors estimated over the expected term of the options. The expected forfeiture rate is based on historical forfeitures experienced. The expected term of options granted is derived using the “simplified method” which computes expected term as the average of the sum of the vesting term plus the contract term as historically the Company had limited activity surrounding its options. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for the period of the expected term.

The following summary presents the options and warrants granted, exercised, expired, cancelled and outstanding as of August 31, 2014:

		Exercise Price Weighted Average
	Option Shares
Outstanding May 31, 2014	860,500	$	0.51
Exercised	(8,250)	$	0.38
Outstanding August 31, 2014	852,250	$	0.51

       In the quarter ended August 31, 2014 options to acquire 8,250 shares of the Company’s common stock were exercised at the exercise prices ranging from $0.38 to $0.43 per share.  Net proceeds to the Company were $3,173.

Revenue Recognition, Policy [Policy Text Block]

Revenue Recognition

Revenues from product sales are recognized at the time the product is shipped, customarily FOB shipping point, at which point title passes. An allowance is established when necessary for estimated returns as revenue is recognized. In conjunction with sales to certain customers, the Company provides free products upon attaining certain levels of purchases by the customer. The Company accounts for these free products in accordance with ASC 605-50 “Revenue Recognition – Customer Payments and Incentives” and recognizes the cost of the product as part of cost of sales.

Investment, Policy [Policy Text Block]

Investments

From time-to-time, the Company makes investments in privately-held companies.  The Company determines whether the fair values of any investments in privately-held entities have declined below their carrying value whenever adverse events or changes in circumstances indicate that recorded values may not be recoverable.  If the Company considers any such decline to be other than temporary (based on various factors, including historical financial results, and the overall health of the investee’s industry), a write-down to estimated fair value is recorded.  The Company currently has not written down the investment and no events have occurred which could indicate the carrying value to be less than the fair value. Investments represent the Company’s investment in a Polish distributor which is primarily engaged in distributing medical devices.  The Company owns approximately 6% of the investee, and accordingly, applies the cost method to account for the investment.  Under the cost method, investments are recorded at cost, with gains and losses recognized as of the sale date, and income recorded when received.

Shipping and Handling Cost, Policy [Policy Text Block]

Shipping and Handling Fees and Costs

Shipping and handling fees billed to customers are classified as net sales and shipping and handling costs are classified as cost of sales. The Company included shipping and handling fees billed to customers in net sales. The Company included shipping and handling costs associated with inbound freight and unreimbursed shipping to customers in cost of sales.

Research and Development Expense, Policy [Policy Text Block]

Research and Development

Research and development costs are expensed as incurred.

Income Tax, Policy [Policy Text Block]

Income Taxes

The Company has provided a valuation allowance of $0 as of August 31, 2014 and May 31, 2014.  

      The Company did not record any income tax benefit for the three months ended August 31, 2014 as the Company is expected to generate profits later in fiscal 2015.

Foreign Currency Transactions and Translations Policy [Policy Text Block]

Foreign Currency Translation

The subsidiary located in Germany is accounted for primarily using local functional currency. Accordingly, assets and liabilities of this subsidiary are translated using exchange rates in effect at the end of the period, and revenues and costs are translated using average exchange rates for the period. The resulting adjustments are presented as a separate component of accumulated other comprehensive loss.

Deferred Charges, Policy [Policy Text Block]

Deferred Rent

Incentive payments received from landlords are recorded as deferred lease incentives and are amortized over the underlying lease term on a straight-line basis as a reduction of rent expense. When the terms of an operating lease provide for periods of free rent, rent concessions, and/or rent escalations, the Company establishes a deferred rent liability for the difference between the scheduled rent payment and the straight-line rent expense recognized. This deferred rent liability is amortized over the underlying lease term on a straight-line basis as a reduction of rent expense.

Earnings Per Share, Policy [Policy Text Block]

Net Loss Per Share

Basic earnings (loss) per share are computed as net loss or income divided by the weighted average number of common shares outstanding for the period. Diluted (loss) income per share reflects the potential dilution that could occur from common shares issuable through stock options using the treasury stock method. The total amount of anti-dilutive warrants or options not included in the earnings per share calculation for the three months ended August 31, 2014 and 2013 was 852,250 and 864,500, respectively.

The following table illustrates the required disclosure of the reconciliation of the numerators and denominators of the basic and diluted earnings per share computations:

	Three Months Ended August 31,
	2014		2013
Numerator:
Loss from continuing operations	$	(219,268)	$	(167,714)
Denominator for basic net loss per common share		7,547,839		7,280,866
Effect of dilutive securities:
Options		-		-
Denominator for diluted net loss per common share		7,547,839		7,280,866
Basic net loss per common share	$	(0.03)	$	(0.02)
Diluted net loss per common share	$	(0.03)	$	(0.02)

New Accounting Pronouncements, Policy [Policy Text Block]

New Accounting Pronouncements

     In May 2014, the FASB issued ASU 2014-09 “Revenue from Contracts with Customers” (ASU 2014-09).  ASU 2014-09 is a comprehensive new revenue recognition model requiring a company to recognize revenue to depict the transfer of goods or services to a customer at an amount reflecting the consideration it expects to receive in exchange for those goods or services.  In adopting, ASU 2014-09, companies may use either a full retrospective or a modified retrospective approach.  ASU 2014-09 is effective for the first interim period within annual reporting periods beginning December 15, 2016, and early adoption is not permitted.  Management is evaluating the provisions of this statement and has not determined what impact the adoption of ASU 2014-09 will have on the Company’s financial position or results of operations.

     Other recent ASU's issued by the FASB and guidance issued by the Securities and Exchange Commission did not, or are not believed by management to, have a material effect on the Company’s present or future consolidated financial statements.

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Significant Accounting Policies (Tables)

3 Months Ended

Aug. 31, 2014

Accounting Policies [Abstract]

Schedule of Inventory, Current [Table Text Block]

	August 31, 2014		May 31, 2014
Raw materials	$	883,000	$	899,000
Work in progress		732,000		635,000
Finished products		265,000		232,000
Total	$	1,880,000	$	1,766,000

Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block]

		Exercise Price Weighted Average
	Option Shares
Outstanding May 31, 2014	860,500	$	0.51
Exercised	(8,250)	$	0.38
Outstanding August 31, 2014	852,250	$	0.51

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	Three Months Ended August 31,
	2014		2013
Numerator:
Loss from continuing operations	$	(219,268)	$	(167,714)
Denominator for basic net loss per common share		7,547,839		7,280,866
Effect of dilutive securities:
Options		-		-
Denominator for diluted net loss per common share		7,547,839		7,280,866
Basic net loss per common share	$	(0.03)	$	(0.02)
Diluted net loss per common share	$	(0.03)	$	(0.02)

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Geographic Information (Tables)

3 Months Ended

Aug. 31, 2014

Geographic Information Disclosure [Text Block] [Abstract]

Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas [Table Text Block]

	Three Months Ended
	August 31,
	2014		2013
Revenues from sales to unaffiliated customers:
United States		253,000	$	255,000
Asia		16,000		136,000
Europe		752,000		604,000
South America		3,000		3,000
Middle East		2,000		15,000
Other		9,000		1,000
	$	1,035,000	$	1,014,000

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Accounts Payable and Accrued Expenses (Details) - Accounts payable and accrued expenses balances (USD $)	Aug. 31, 2014	May 31, 2014
Accounts payable and accrued expenses balances [Abstract]
Accounts payable	$ 178,155	$ 385,701
Deferred rent	52,289	55,980
Total	$ 230,444	$ 441,681

XML

Subsequent Events (Details) (Subsequent Event [Member], USD $)		0 Months Ended
	Sep. 23, 2014 2014 Stock Incentive Plan [Member]	Sep. 16, 2014
Subsequent Events (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross		24,500
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price (in Dollars per share)		$ 0.85
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period		5 years
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized	800,000

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (USD $)	3 Months Ended
	Aug. 31, 2014	Aug. 31, 2013
Cash flows from operating activities:
Net loss	$ (219,268)	$ (167,714)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	63,420	50,235
Change in provision for losses on accounts receivable	(15,541)	4,675
Inventory reserve	20,782	(6,713)
Gain on disposal of equipment	(665)
Stock option expense	1,013	881
Decrease in deferred rent liability	(3,691)	(1,656)
Changes in assets and liabilities:
Accounts receivable	675,047	(36,264)
Inventories	(135,203)	(213,509)
Prepaid expenses and other assets	(38,825)	15,527
Accounts payable and other accrued expenses	(207,546)	(25,609)
Accrued compensation	4,118	3,876
Net cash provided by (used in) operating activities	143,641	(376,271)
Cash flows from investing activities:
Purchases of property and equipment	(3,675)	(8,731)
Proceeds from sale of equipment	1,900
Net cash used in investing activities	(1,775)	(8,731)
Cash flows from financing activities:
Exercise of stock options	3,173	760
Increase in intangibles	(6,252)
Net cash (used in) provided by financing activities	(3,079)	760
Effect of exchange rate changes in cash	(934)	(91)
Net increase (decrease) in cash and cash equivalents	137,853	(384,333)
Cash and cash equivalents at beginning of period	1,509,125	2,469,796
Cash and cash equivalents at end of period	1,646,978	2,085,463
Supplemental Disclosure of Cash-Flow Information:
Cash paid during the period for: Interest	$ 18

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Geographic Information

3 Months Ended

Aug. 31, 2014

Geographic Information Disclosure [Text Block] [Abstract]

Geographic Information Disclosure [Text Block]

Note 5: Geographic Information

Financial information about foreign and domestic operations and export sales is approximately as follows:

	Three Months Ended
	August 31,
	2014		2013
Revenues from sales to unaffiliated customers:
United States		253,000	$	255,000
Asia		16,000		136,000
Europe		752,000		604,000
South America		3,000		3,000
Middle East		2,000		15,000
Other		9,000		1,000
	$	1,035,000	$	1,014,000

No other geographic concentrations exist where net sales exceed 10% of total net sales.

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Significant Accounting Policies (Details) - Reconciliation of the numerators and denominators of the basic and diluted earnings per share computations (USD $)	3 Months Ended
	Aug. 31, 2014	Aug. 31, 2013
Numerator:
Loss from continuing operations (in Dollars)	$ (219,268)	$ (167,714)
Denominator for basic net loss per common share	7,547,839	7,280,866
Effect of dilutive securities:
Options
Denominator for diluted net loss per common share	7,547,839	7,280,866
Basic net loss per common share (in Dollars per share)	$ (0.03)	$ (0.02)
Diluted net loss per common share (in Dollars per share)	$ (0.03)	$ (0.02)